Kimfa Lee ChungJeremy BellamySonia OsmondDanielle ModesteKern Rocke

Marketing Environment

Market Segmentation

Niche and Micro Marketing

It is an organizational function and a set of processes for creating, communicating and delivering value to customers.

It is managing customer relationships in ways that benefit the organization and its stockholders.

A product is a good, service or idea

Marketing is an integral part of the Management

Function

Marketing is an integral part of the Management

Function

The Marketing Environment surrounds the buyer and the marketing mix.

Organizations have control over the 4Ps of the marketing mix but they are unable to control any of the Environmental forces.

These Environmental Forces are:1. Political2. Legal

4. Regulatory5. Societal6. Economic7. Competitive8. Technological

These forces affect the manager’s ability to expedite change in the market because they are outside factors that they must take into consideration when developing a marketing plan.

o Influences how a marketing manager should perform certain tasks

o Influences customers’ preferences and needs for products

o Managerial decisions become affected by environmental forces which influence customers’ reactions to the organization’s marketing mix

SOURCES

DIISTRIBUTORSRETAILERS (Foodservice Operators)

CONSUMERS

This has a major influence on competition, which is affected by the number of industries controlling the supply of a product, relative to the supply. Demand is determined by buyers’ purchasing power and willingness to buy.

Scenario◦ In cases such as the Great Recession in

the USA, American consumers were driven to adopt a back to basic frugality in their lifestyle and spending pattern; in –turn marketers had to make decisions to satisfy a more cautious spender with lower priced goods & services.

Mc Donald's during the recession made decisions that actually won them the recession…they called it “Recession-Friendly Pricing”

Marketers need to pay attention to income distribution & income levels.

Some establishments use this information to market their goods and services toward their target groups.

◦ Income, cost of living, interest rates and savings and borrowing patterns have a large impact on companies forecasting.

The competitive environment consists of all the organizations that attempt to serve similar customers.

Two types of competitors are of major concern: brand competitors and product competitors.

Brand competitors provide the most direct competition, offering the same types of products as competing firms.

Product competitors offer different types of products to satisfy the same general need. Domino’s Pizza, McDonald’s, and Kentucky Fried Chicken are product competitors.

Marketers must identify their relevant brand and product competitors in order to identify market opportunities and develop marketing strategies.

Marketers need to identify when some product competitors become brand competitors by expanding their product offerings.

Keeping track of the number, types, and actions of competitors is becoming increasingly important, but much more complex and difficult.

Marketers will have to pay more attention competitor pricing, new-product development, and changes in corporate strategy.

Legal forces have a great part to play in preserving competition and it is important for marketers to interpret these laws when analyzing their marketing mix.

Influence the country’s economic & political stability and decision making.

It affects domestic matters, negotiations of trade agreements.

Political trends or rather -the government of the day can have a tremendous impact on the hospitality and healthcare industries.

Food Safety - they are responsible for placing proper measures in place for preventing and managing outbreaks of food-bourn illnesses.

Financing – dependent on the government to supply the funding necessary to meet healthcare services (feeding of patients/ inmates).

Human resources – ensuring that trained professionals are filling the positions where required.

Restaurants will be affected mostly by tax related issues, labour laws and regulations related to food preparation.

Food prices is always dependent state of the economy and political influence. Rise in taxes affect have an impact on pricing food.

Labour laws such as minimum wage must be taken into consideration when hiring staff. This in turn affects a decision for number of employees in an establishment.

There are numerous laws designed to protect the consumers and preserve competition.

Interpretation of these laws by marketers has a great impact on marketing mix components.

Business executives must watch these

developments when planning their products and marketing programs.

A. Promoting competition

Act Purpose Sherman Act (1890) Prohibits monopolistic practicesClayton Act (1914) Prohibits anticompetitive activitiesFederal Trade Commission Act (1914) Establishes regulatory agency to enforce laws against unfair competition Robinson–Patman Act (1936) Prohibits price discriminationLanham Trademark Act (1946) Protects trademarks & brand namesUS–Canada Trade Act (1988) Allows free trade between US & Canada

B. Protecting consumers and society

Food, Drug, and Cosmetics Act (1938) Regulates food, drug & cosmetic industries

Fair Packaging and Labeling Act (1966) Regulates packaging & labeling

Child Protection and Toy Safety Act (1969) Prevents marketing of dangerous products to children

Child Protection Act (1990) Regulates advertising on children’s television programs

Nutrition Labeling and Education Act (1990) Requires that food product labels provide detailed nutritional information.

Laws typically affect marketing activities by indicating what can or cannot be done.

Until recently, Germany had a law that forced most retail stores to close at 6:30 PM on weekdays and 2 PM on Saturdays, and it did not allow commercial baking on Sunday.

Regulatory forces are enforced regulations that can affect marketing decisions.

Industries are encouraged to develop guidelines to stop questionable practices.

Those agencies responsible are: (based in the USA)oUS Department of Health and Human ServicesoUS Department of AgricultureoUS Department of Commerce

• Food Additive Regulation( including Food Irradiation)

• Labeling

• Novel Food Processing

• Standardization

• Responsibility (liability)

• Genetic Modifications

• Consumer protection

The USDHHS Act, of enforced regulations are there to ensure that all foods that are to be put on the market( local & international), fit the criteria of being pure & wholesome, safe to consume and have been produced under sanitary conditions.

The Act provides 3 mandatory standards:1. Standards of identity2. Standards of quality3. Standards of fill of container

US Department of Health and Human Services. How is marketing affected by this force? (pg 127)

The USDA facilitates strategic marketing of agricultural product in domestic and international markets by grading, inspecting and certifying the quality of these products in accordance with official USDA standards or contact specifications.

There are established grade standards for several varieties of foods which industries are to meet accordingly when attempting to market products.

How does the USDA affect marketing? (Chapter 5)

USDA’s Food Safety and Inspection Service(FSIS) is responsible for assuring that US standards are met for imported meat and poultry.

The FDA has jurisdiction over ALL foods not covered by federal meat and poultry inspection laws.

Upon our shores, the Chemistry, Food and Drugs Division of Trinidad and Tobago (CFDD).

There mission involves:Safe quality and standards of foods, Safety involving pesticides & technologies and laboratory services in the areas of food and drug.

Any persons and such wishing to import, manufacture and sell food products must have them inspected by the CFDD.

This forces rings a bell off, causing marketers to be responsible for decisions. It is somewhat linked to the regulatory and legal forces as it is an aspect that deals with looking out for the consumers and population.

It includes environmental pollution and the use of pesticides on crops as well as food labelling.

The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs. Therfore marketers has to take social factors into consideration before making a decision.

It includes the behaviour of the demographic environment such as the population size, growth.

Global trends

Cultural diversity – In the US, it’s a mosaic of unique people with a variety of cultures. Successful marketers understand the delicate balance between important cultural differences and similarities that unite different cultures.

Emphasis on Health and Fitness

Desire for convenience foods – People want fast food.

Consumerism - This movement is one reason marketers need to adopt an ethics perspective. Giving consumers products that comply with expectations, charging fair prices, being honest, and practicing social responsibility are the best ways to respond to consumerism.

Cause related marketing – buy the Yoplait with the pink ribbon and support breast breast cancer….

In the US, the Federal Trade Commission(FTC) is a nation protection agency who work for the consumers. They enforce the regulations that work to protect the consumer.

One of the most talked about food topics these day is how food is being marketed to children.

The FTC, FDA,CDCP and the USDA have released a jointly prepared set of principles that will be reviewed, commented on, and implemented in 2016. The principles want to stop advertising unhealthy foods to children in an effort to fight the childhood obesity crisis.

Marketers are expected to include foods made of at least one of the following components: fruits, vegetables, whole grains, fat-free of low-fat milk, fish, extra lean meat or poultry, eggs, nuts and seeds, and beans.

They cannot advertise foods with more than 1 g of saturated fat, 0 g trans fats, 13 g added sugars, or 210 mg of sodium.

They age of children will now be move up from 12 to 17 to include teenagers in healthier choices.

This proposed guideline has marketers peeved.

The FDA is now supporting a the front-of-packaging labeling scheme introduced by the Grocery Manufacturers Association (GMA) and the Food Marketing Institute (FMI).

McDonald’s, Wendy’s, KFC, Subway are some of the fast food chain restaurants that have gone the way of marketing reduced calorie labeling for more health conscience trend customer.

Genetically Modifies foods

Packaging – Bispherol A (BPA) free containers, microwavable containers –marketers are striving to market food free of this chemical

Infant formula – Marketers have introduced a wide range of formulas to meet almost nutritional need. DHA, RHA, Gentle-ease…

Service and Transport – convenience counts. Telephone meal order, on-line meal orders, mobile meal orders via smart phones, TV orders of frozen meal items being shipped to homes etc.

Food Preservation techniques –

The challenge is not only technical but also commercial–to make practical, affordable versions of products.

Increased regulation. Marketers should be aware of the regulations concerning product safety, and other areas that affect technological changes. They must also be alert to any possible negative aspects of an innovation that might harm users or arouse opposition.

This is the process of dividing a total market into groups of people with similar needs, wants, values and buying behaviour. (Harrell 2002)

What is a need?

This a basic commodities that is essential for the consumer. This need influences the wants.

For more sales to be made

To gain knowledge about the customer

Product vary to satisfy consumer needs

Prevent promoting products to the wrong people

Target specific groups

Market a wider range of differentiated products

Customer feed backs are easily achieved

ADVANTAGES DISADVANTAGES

Understand the different needs of the customer

Increase marketing cost

Grouping consumers by specific criteria facilitates identification of NEW properties of products

Increased costs to develop variations products

Helps in understanding consumer Higher advertising and other cost

Identifies competition and opportunities

New costs incurred for researching segmentation.

More efficient use is made of marketing resources - less waste

Values and Life-Styles Research Program

Understanding customers is critical to marketing. VAL strengthens demographic characterizations by explaining the deeper psychological drivers of consumer behavior.

Defining segments based on a prediction of consumer behavior based on resources and primary motivation

VALS Value and Life Style Motivation: This is a research program based on consumer behavior on resources and primary motivation. It groups people according to their lifestyle

VALS three compartment model: motivation viewed from low to high innovation

Ideas: consumer choices based on knowledge and principles.

Achievement: consumer choices made, are based on perceptions of success noticeable by peers.

Self - expression: consumer makes choices based on social or physical activity, variety or risk

Behavioral variables

Focus on consumer behavior toward the use of a product; (occasions, benefits, user status and rate, loyalty status, readiness stage and attitude towards product).

Customer relation management:

A computerize data base to store and track purchases and information about customers.

It is the discovery of a smaller segment of the market and creating a product or service for the market

It is easier to gain success in this market due to lack of competitive competition.

Generally a niche is a very targeted and focused market

Example: The Internet

Meet the consumer UNIQUE needs

Say the RIGHT thing

Always TEST the market.

The benefits which you have on entering the market has to have a special appeal on offer.

Identify the unique needs of the potential audience.

Find ways to tailor the product or service to meet them.

Ensure when approaching a new market niche that you understand the market’s hot buttons.

Be prepared to communicate with the target group as an understanding member not an outsider.

Example:

To increase sales from the new niche the Food Service Manager would need to change the way he communicates with niche. This can be done by revising the marketing message.

Assess the direct competitors you will find in the new market niche.

Determine how you will compare to the competitors in the market.

Conduct a competitive analysis by reviewing the competitors advertisements, brochures or websites to look for their key selling points.

Observe pricing, delivery and other service characteristics.

Relatively new marketing trend created by the diversity of the consumer population and the difficulty in creating a single product that appeals to all the diverse groups in the population.

Refers to the activities performed by the individual providers of goods and services within a macro-marketing system.

Organization and Food Service businesses use various marketing techniques to accomplish objectives related to profits, market share, cash flow and other economic factors which enhance their well being and position in the market place.

Managers must carefully design their marketing plans to ensure that they complement related production, distribution and financial constraints.

Food Service Marketing Managers function is to identify a specific market or group of customers.

The manager then delivers products and promotions that ultimately maximize the profit potential of that targeted market.

This is the micro-marketing function within an entity.

Managers strive to get their organizations to anticipate and accurately determine the needs and wants of customer groups.

They respond effectively with a flow of need-satisfying goods and services.

The four major micro-marketing factors in the marketing mix which can be readily adjusted by the organization are:

Product Price Placement Promotion

Food Services who offer a unique product can leverage brand loyalty, specialized distribution channels or technological advantage and can therefore go ahead of their competitors in the market.

Food Service companies dealing with low commodity products tend to focus on price, pursuing efficiency and cost controls to outbid the competition.

Note: If food service is offering the right product at the right price, a high amount of sales wont occur if the potential buyers or target group is unaware of the product or does not have access to it.

Hence the importance of promotion and placement of the product or service.

Market decisions has to be made to ensure the right product or service has to be selected for the target group.

This is achieved by doing market research and data analysis to determine how well the product meets the wants and needs of the target group.

Example a new product will have higher promotional costs than an improved version of an existing successful product will be likely make use of its predecessor's image

This is distributing the product to the target market using appropriate channels at the right time and in the proper quantities.

Some distribution channels for food services are: retail, wholesale, catalog and others.

Managers devise means of transporting the goods to the selected sales channels

This relates to sales, advertising, public relations and other activates that communicate information intended to influence consumer behaviour.

IT is necessary to influence the behaviour of retailers and others who resell or distribute the product.

The major types of promotion are : Personal Selling Mass Selling Sales Promotion

Personal Selling

This refers to face-to-face usually provides immediate feedback for the company about the product and instils greater confidence in customers.

Mass Selling

This involves advertising on traditional mass media, such as television, radio, direct mail, and newspapers, and is beneficial because of its broad scope.

It entails the use of unpaid media exposure, known as publicity, such as feature articles about a company or product in a magazine or related interviews on television talk shows.

Sales Promotion

This includes free samples, coupons, contests, and other miscellaneous marketing tactics.

These approaches are used to stimulate interest in products, encourage first-time trials, or help build brand loyalty, among other objectives.

This entails using discounts and long-term pricing goals, as well as considering competitive, demographic, and geographic influences.

From the buyer's perspective, the price must be within certain boundaries and must be commensurate with the perceived value of the item.

For the producer, the price of a product or service generally must at least meet some minimum level that will cover a company's cost of producing and delivering its offering.

However, even if a company were to price its items exactly at the break-even point on a unit basis, there is no guarantee there will be sufficient demand at that price.

Pricing is an implicit negotiation between supplier and customer, with competition as an intervening factor that shapes the nature of this negotiation.

In a few cases pricing decisions may be largely out of a firm's control, such as when government controls are in effect or when items (usually raw materials and agricultural commodities) are sold through a competitive bidding system.

The three most common competitive strategies according to Michael Porter’s book Competitive Strategy are:

Lower-Cost Supplier

Differentiation/Uniqueness

Niche Development

Porter believed that the strategy a company chooses is shaped in large part by its current position within its industry and by the industry's current stage of development.

Food Services which manufactures a commodity product which adopt a low-cost supplier strategy are usually characterized by a vigorous pursuit of efficiency and cost controls.

These Food Services compete by offering a better value than their competitors, accumulating market share, focusing on high-volume and fast inventory turnover.

Food Services adhere to a differentiation strategy achieve market success by offering a unique product or service.

They often rely on brand loyalty, specialized distribution channels or service offerings, or patent protection to insulate them from competitors.

Due their uniqueness, they are able to achieve higher than average profit margins, making them less reliant on high sales volume and extreme efficiency.

Food Services which pursue a niche market strategy succeed by focusing all of their efforts on a very narrow segment of an overall target market.

They strive to prosper by dominating their selected niche.

They are able to overcome competition by aggressively protecting market share and by orienting every action and decision toward the service of its select group.